While maintaining publicly that all of Maryland's privately insured savings and loans were healthy, state officials for months have been privately seeking to rein in some of the state's fastest growing financial institutions.

But Maryland's efforts to control its high-flying savings and loans have been hampered by laws that limit the power of state regulators and by opposition from the S&L industry, which controls the privately owned Maryland Savings-Share Insurance Corp., a top legislative official said yesterday.

The private concerns about the management of Old Court Savings and Loan of Baltimore exploded into a run by depositors last week after a new chief executive was appointed at the urging of the state Division of Savings and Loan Associations and MSSIC. The run worsened with disclosure of a criminal investigation of conflicts of interest at Old Court.

Some depositors also began withdrawing funds from Merritt Commercial Savings and Loan Association Saturday after disclosure that Merritt had been urged to dispose of its most conspicuous investment -- a 39-story, $38 million office tower in downtown Baltimore.

Maryland regulators do not have the power to force Merritt to sell the unfinished building but "recommended" the action, said Dennis Finnegan, senior vice president of Merritt. That recommendation was the second effort by the state to curtail the expansion of Merritt, which has ballooned from less than $100 million in assets to almost $340 million in three years under the ownership of Baltimore real estate lawyer Gerald Klein.

Earlier, the savings and loan division refused to act on Merritt's application to expand into Delaware, effectively blocking the move. Merritt has withdrawn the application, Finnegan said yesterday.

Both Old Court and Merritt have grown rapidly by paying some of the highest interest rates in the nation on savings accounts, drawing many millions of dollars of deposits from outside the state. In order to pay high interest on deposits, both have aggressively invested in real estate projects that are more profitable but potentially much riskier than the home mortgages in which savings associations traditionally invest.

"Beyond Merritt there are others that have been engaged in very similar practices," said Sen. Howard Denis, the Montgomery County Republican who headed a Maryland legislative task force on savings and loans. Among the four new laws that were passed by the legislature in response to the task force's study was one giving the savings and loan division power to issue cease-and-desist orders to stop investments such as Merritt Tower.

Denis said signing those bills should be a top priority for Gov. Harry Hughes when he returns to Annapolis today from a trip to the mid-East that was cut short so he could deal with the escalating thrift crisis.

Describing MSSIC as "a glorified trade association," Denis said the private insurance fund tried to cover up the growing difficulties of the state-chartered thrift institutions and opposed some reforms considered by the legislative task force.

"I believe that we were given inaccurate and misleading information" about the extent to which Maryland S&Ls were engaging in risky business, Denis said. He said the legislative panel asked about investments in commercial loans and real estate speculation and was "led to believe there wasn't any problem."

State officials gave similar assurances to a congressional subcommittee that looked into the adequacy of private state deposit insurance plans after the Ohio S&L insurance fund was wiped out by the failure of a single large institution in mid-March.

In a letter to the House commerce, consumer and monetary affairs subcommittee dated March 29, Charles Brown, director of the savings and loan division, said, "Presently we do not have any associations that we feel have severe operating problems."

Yet a week earlier, Brown's division had notified Old Court of its concern with its operations, spelling out many of the problems that led the state and MSSIC to install new management and start a criminal investigation less than two months later.

"I am distressed that he was not more candid with us," a subcommittee staff member said yesterday, noting that the hearings were trying to determine whether state insurance plans were capable of handling problem institutions.

Attorney General Stephen Sachs has said his investigation will focus on "possible criminal misconduct in the general area of conflict of interest" involving the three investors who own Old Court -- Baltimore real estate investor Jeffry Levitt, Pennsylvania shoe manufacturer Allan Pearlstein and Maryland attorney Jerome Cardin.

Old Court has invested $150 million of its $839 million in assets in real estate ventures in which it is a partner and has loaned at least $3.76 million of depositors' money to its owners, The Baltimore Sun reported yesterday. The Sun said a six-week investigation turned up 73 partnerships and corporations in which Old Court was involved.

Both Old Court and Merritt Commercial stand to lose part of their net worth because of the collapse of Bevill, Bresler Schulman Asset Management Inc., a New Jersey government securities firm that ran into financial difficulty last month. The extent of their losses is not known yet, but Old Court had about $800,000 invested with Bevill, Bresler. The firm owes Merritt more than $2.2 million, or about one-sixth of its net worth of $15 million.

Merritt has invested about $13 million in its new downtown Baltimore office tower, which is being built directly with depositors' funds, vice president Finnegan said yesterday. He said Merritt "planned all along" to sell the building and already is negotiating with potential buyers.